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IBERIAN DAILY 26 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: IBERDROLA, LOGISTA, NATURGY.

Central Banks knock down stock markets
The European stock markets ended the week with losses, affected by the hawkish tone conveyed by all central banks and the strong rate hikes announced. Thus, the Ibex 35 ended the week down by -5.0%, falling below the 7,600 points benchmark, whereas the Dax and the Euro STOXX 50 fell by -3.5% and -4.25% over the week, respectively. Thus, within the Euro STOXX, the best-performing sectors were Chemicals and Food, whereas Travel & Leisure and Real Estate were the week’s worst relative performers. On the macro side, in the Euro zone, September’s preliminary PMIs came in worse than expected (contraction zone), vs. the positive PMI data in the US. In the United Kingdom, the new tax plan announced by the Ministry of Finance, with an estimated cost of £ 45 Bn, led sovereign debt to see the highest rise in the last three decades (boosting rate hikes expectations), the GBP to plummet and the British stock market to fall to 6-months lows. Pressure continues early this morning after Kwarteng warned that further announcements will be made soon. In Italy, the right-wing coalition led by the FDI managed to win more than 43% of the votes and a majority in both houses of Parliament, placing G. Meloni in charge of forming the government in an election with the lowest turnout in history.
What we expect for today
European stock markets would open with losses of around -1.0% with cyclical stocks hit by risk aversion and bond proxies by the rising interest rates. Currently, S&P futures are down -0.7% (the S&P 500 ended +0.35% higher on Friday vs. the European closing bell). Volatility in the US rose (VIX 29.92). Asian markets are mixed (China’s CSI 300 +0.3% and Japan’s Nikkei -2.6%).
Today in the US we will learn August’s Chicago Fed index and September’s Dallas Fed index and in Germany September’s IFO. Debt auctions: Germany (€ 6 Bn in 6M and 12M t-bills) and France (€ 5.4 Bn in 3M, 6M and 12M t-bills).